Saturday, July 25, 2009

Kieran Allen's recently published book is called Ireland's Economic Crash. Itis a book cobbled together from a variety of sources. The book has asprinkling of tables and graphs to lend it an authority it does not have.Indeed the question of the reliability and accuracy of bourgeois statisticsis not even raised in the book notwithstanding the fact that there is muchuse made of them. For instance he claims that "today manufacturingrepresents just 13 per cent of the Irish workforce.". (Ireland's EconomicCrash; page 37) Kieran's statistics are drawn from a bourgeois source. Whatthese bourgeois statistics cannot tell us is that although the manufacturingsector constitutes 13 per cent of the work force it has a very hightechnical and organic composition of capital. This means that its labourpower is very highly exploited which means its contribution to theRepublican economy cannot be simply based on the size of its labour force.INTEL located in the Irish Republic is probably a classic example of such ahighly productive corporation,

The services sector uncritically referred to by Kieran in the book afrequent number of times is a rather ambiguous bourgeois category. This isbecause many of the services are commodity producing sectors while other arenot. This means that many of these services are engaged directly in thevalorisation process and thereby are direct sources of value. This meansthat their status is no different to that of the manufacturing sector. Thereare other more obvious problems with Kieran's use of statistics which I shan'tgo into now. But, en passant, I understand that John Fitzgerald is GarretFitzgerald's nephew and not his son as Kieran suggests. (ibid. page 126)

The principal underlying assumption in Kieran Allen's book is that there hasbeen a corporate takeover of Ireland. This thesis is elaborated in aprevious book of Kieran's called The Corporate takeover of Ireland (IrishAcademic Press; 2007).

Kieran's understanding of the nature of the corporation dominated statestems from a false instrumentalist and voluntarist theory of the state.According to this theory of the state because the various lobbies andcommittees are dominated by personnel from the corporate sector because ithas more economic power than other interest groups such as farming and tradeunion interest groups. In that way the minority interests of the corporatecapitalists are promoted more by the state. This means that to be effectiveagainst the minority interests of the corporate capitalists it is necessaryfor a radical left wing government to be supported by a massextra-parliamentary movement. This movement, Kieran would claim, wouldcounter the economic power of the corporate dominated lobbyists, committeesand whatever else.

However it is not correct to suggest, as Kieran does, that there has been acorporate takeover of the Irish state because parts of that state aredominated, even if increasingly, by significant members of corporations andtheir satraps. Even though not correct concerning other matters, NicosPoulantzas was correct when he argued that the state can be capitalistwithout the capitalist class having to act as the ruling political class.The real situation is that the state is capitalist by virtue of the factthat the state can only act within certain limits determined by thecapitalist mode of production. The state can only function if it has powerto raise taxes and command material resources. So long as the materialreproduction of society is the capitalist mode of production, this powerultimately depends on the success of capitalist accumulation. If the statepersistently acts against the interests of capital then sooner or later theconditions of capital accumulation will be undermined and the economy throwninto crisis. The state, then, would find it increasingly difficult to securethe material resources it needs to function. Insofar as society isstructured by the capitalist mode of production, the state is alwaysdetermined, in the last instance, by the need to sustain capitalistaccumulation. Yet within such structural limits there is always a largedegree of relative autonomy for state policy and political action

Now if capital in the form of corporate capital is the leading and dominantform of capital it will come as no surprise that the state is determined, inthe last instance, by the need to sustain corporate capital. Yet withinthese corporate structural limits there is always a large degree of relativeautonomy for state policy and political action. This provides a spacewhereby the state may or may not bear corporate dominated committees withinitself. The upshot is that whether a state contains or does not containcorporate or non-corporate dominated bodies is not necessarily conclusiveevidence as to whether there has been a corporate takeover of the state. Thepersonnel engaged in aspects of the state will depend more on the specificconditions prevailing at any particular time. This means that even in theabsence of any corporate personnel occupying any state agencies the stateitself may have undergone a corporate takeover. Kieran, then, cannot usecorporate personnel as the criterion as to whether political states arecorporate or not. In short his position shares a lot in common with thetheory of State Monopoly Capitalism according to which there is said to beclose personal relations between the monopolies and the members of theapparatus of the state. The state and the monopolies, it is thereby claimed,are fused into a single system.

But the larger and more powerful section of corporate capital in Ireland isforeign. This means, for Kieran, that corporate Ireland has been taken overby foreign corporate capital. It is a claim suggesting that corporatecapitalism is generally more oppressive on the working class thannon-corporate capitalism. There is then progressive and non-progressivecapitalism and the politics that goes with it. Clearly Kieran and the SWPwant to be on the side of the little man, "the little progressive capitalist".This had been Sinn Fein's position too until they decided to make Britishimperialism its paramour. The SWP are catching up on Sinn Fein.

This can only mean that the Fianna Fail led government no longer representthe class interests of the non-corporate Irish bourgeoisie. This is becauseit is not possible for a corporate state to exclusively represent theinterests of corporate capitalism while serving the interests ofnon-corporate capital. Since this corporate state cannot by definitionrepresent the class interests of the Irish working class the conditions foran alliance between the non-corporate capitalist class and working class nowexists. Such an alliance can only but be nationalist in character. Butnationalism and communism share nothing in common. This being so Ireland'sEconomic Crash is a nationalist work sharing nothing in common withcommunism.

When it comes to Kieran's use of Marx's work on political economy we aresubjected to conceptual and analytical distortion of Marx's thought. Kieranclaims that ".this is a systemic crisis which arose from a search for higherrates of profit. Those pressures led to over-production and a speculativewave of madness in the financial sector, so even if the system revivesagain, the same pressures will re-emerge in the future." (ibid. page 157)

But the above is just not true. It is only when the total amount of surplusvalue produced fails to compensate for the falling general rate of profitthat an economic crisis breaks out. This is of significance in relation tooutlining the character of the crisis. The falling rate of profit then doesnot necessarily spell economic stagnation or crisis. Instead it means therelentless drive of capitalism towards more and more accumulation ofcapital. This is the hidden dynamic that leads to enormous economicdevelopment. It is only when the amount of surplus value produced fails tomake up for the fall in the general rate of profit that the expandingaccumulation starts to breakdown. Incidentally Kieran in his book concludesthat the possible current crisis is unique because it hit's the core of theglobal system. But all economic crisis hit the core of the global system. Itis just that that make them economic crises.

Then there is Kieran's under-consumptionist ideology. Underconsumptionism isthe ideology of reformist politics. It falsely suggests that capitalism ispotentially capable of serving the interests of the people.

"The more people loose their jobs, the less money there is to buy goodsproduced by other workers. A government that actively intervened couldalleviate this suffering by stepping in where private businesses areunwilling.The whole economy has entered a downward spiral because of thecuts, levies and sackings." (ibid. pages 7 and 8)

"But the more they succeed, the more they reduce the buying power of workersand feed into the problem of over-production. And when profit rates are onlypartially restored, this can also lead to reluctance by capitalists toinvest in new plant and equipment. The slowing of investment then lead to"excess savings" and this, too, feeds into the wider problem of reducedmarkets for others" (ibid.page 97)

For him taking demand out of the economy by cutting wages further reinforceseconomic decline. Now the logic of this false position is that if, on theother hand, wages are increased sufficiently demand can be raised to such adegree that they precludes the outbreak of recession. Underconsumptionismand reformism are inseparably related to each other. Much of the leadershipof the current trade union movement in Ireland is underconsumptionist in itsconception of solutions to unemployment, economic crises or . So Kieran willnot be lost for company. Underconsumptionism suggests that capital can begradually reformed by incrementally increasing demand through wage increasesand expansion of social spending beneficial to the working class and "theunderclass". But capitalism cannot be reformed into a system that serves theclass interests of the working class. It is an historically limitedobsolescent social system that must be replaced by communist society if theneeds of humanity are to be minimally met.

It is asserted in his book that because of this falling rate of profitcapitalism must generate a bubble sequence as compensation: "As economicperformance has declined, the system has needed periodic bubbles to addvitality and growth. From the 1990s onwards, these bubbles played anincreasingly important and disruptive role. There was a stock market bubbleand then a dot com bubble when absurd prices were paid for internet firms."(ibid page 89)

But Kieran never shows how these bubbles are a product of falling profitrates. To at least render his unfounded assertion plausible an outline as tohow they occur is required. "As economic performance has declined, thesystem has needed periodic bubbles to add vitality and growth." Then if thisis the case capitalism has found a solution to its problems. There isnothing for capitalism to do but produce continuous bubbles since thesebuttress up the system. If these bubbles have been adding vitality andgrowth then how can they inevitably burst. If, as Kieran is, anunderconsumptionist then increasing demand through state action shouldindefinitely sustain non-collapsible bubbles. But then they are not bubbles.

Kieran informs us that neo-liberalism has failed. Indeed the title of one ofhis chapter is called The failure of Neo-Liberalism. "Today this wholeedifice is in tatters, as neo-liberals recant and proclaim themselvesconverts to regulation." (ibid. page 71) But one could as much say thatKeynesianism has failed or classicalism has failed. One could say too thatcapitalism has failed because of the outbreak of depressions and even largescale wars. But again this is to misunderstand the nature of the capitalistsystem of reproduction. It is through the medium of periodic economicdepressions, and even wars, that capitalism perpetuates itself. Withoutrecessions or depressions there can be no economic development undercapitalism. Neo-liberalism is merely another form in the history ofcapitalism irrespective of its existence as an imperialist ideology.Capitalist production organised in the form of corporations is just anotheraspect of capitalism's economic history. Neo-liberalism or globalisationnever meant the end of depressions. Indeed the present economic depression,if there is no social revolution, will lead to the consolidation ofneo-liberalism. Those reformist ideologues repeatedly declaring thatneo-liberalism is at an end completely misrepresent the character ofcontemporary events.

According to Kieran "it is no longer possible to draw a neat dividing linebetween financial speculators and the wider capitalist class. The divisionbetween finance capital and industrial capital broke down a long time agoand now all corporations engage in 'financial engineering'." (p. 87)

Kieran is falsely suggesting in the above quoted comments that financial andindustrial capital are inseparably integrated with each other. If his claimwas correct then General Motors which has its own financial arm would not beexperiencing acute financial and sales problems. Indeed if finance andindustry were integrated into a unity there would have been no financial norgeneral economic crisis.

Again his ignorance of Marx's Capital is demonstrated here. Within thesystem as a whole there is a necessary distinction between industrial andfinancial capital. Each form pays a distinctly different function within theeconomic system. The former is located within the production process whilethe latter is located in the circulation process. It is the very distinctionbetween these two forms within the general unity of the system that renderseconomic crises possible.

Towards the end of the book we are presented with the 9-Step programme forchange. The wording may be apt to remind readers of AA's 12 -Step Programmeto alcoholic recovery. In this chapter Kieran wants to have his cake and eatit. He wants to support revolution and yet support nine major demands that,he indicates, are realisable under capitalism. If such an 9-Step Programmeis realisable under capitalism then the entire justification for communismcollapses. Either the class interests of the working class can be realisedunder capitalism or not. They cannot as Kieran seems to believe sort of berealisable under contemporary conditions.

Kieran's nine steps to reform is a nationalist opportunist plan. Given thegrowing global nature of capitalism today a national plan cannot solve theeconomic depression that has engulfed Ireland. The solution to the economiccrisis that has ripped through the Irish economy must be global in charactereither from the perspective of capitalism or communism. It is not possibleto introduce a national plan, such as Kieran's, as a solution to Irisheconomic problems. Given that the Irish economy is merely a minusculecomponent of the world capitalist system radical solutions within a nationalframework cannot be realised. There must be a global challenge to capitalfrom the world's working class. This means that workers in Ireland muststruggle for a united communist federation of England, Scotland, Wales andIreland as a platform for the global communist revolution. Despite thefundamental weakness of the politics of Trotsky he was spot on when he madethe following remarks:

"The forces of production which capitalism has evolved have outgrown thelimits of nation and state. The national state, the present political form,is too narrow for the exploitation of these productive forces. The naturaltendency of our economic system, therefore, is to seek to break through thestate boundaries. The whole globe, the land and the sea, the surface as wellas the anterior has become one economic workshop, the different parts ofwhich are inseparably connected with each other. This work was accomplishedby capitalism. But in accomplishing it the capitalist states were led tostruggle for the subjection of the world-embracing economic system to theprofit interests of the bourgeoisie of each country. What the politics ofimperialism has demonstrated more than anything else is that the oldnational state was created in the revolutions and the wars of 1789-1815,1848-1859, 1864-1866, and 1870 has outlived itself, and is now anintolerable hindrance to economic development." (Leon Trotsky. The War andthe International ; Author's Preface vii)

Nation states promoted the development of capitalism in the past andconstituted the framework, in a sense, for the solution to economic and evensocial problems. Today the nation state is an obsolescent political formthat reinforces economic problems while obstructing their solution. Thesolution to the present general crisis of capitalism can only be solvedglobally whether on the basis of capitalism or communism.

To finish: Kieran Allen's book exposes the opportunism of his politics andthat of the SWM of which he is a leading member. It is an obscurantist bookin which he likes to have things both ways. This allows him to be a winnerirrespective of what side wins. He advances a plan of action which hesuggests is realisable under capitalism while at the same time he seems tomildly suggest that it may not be quite realisable under capitalism. Heclaims that neoliberalism has failed while hinting that it has worked. Hisaims are thereby rendered ambiguous which confuses workers rather than helpprovide them with clarity. He follows the same approach in his economicanalysis. He claims at one moment that the falling rate of profit is thecause of the crisis and then at another time hints that some other factor.At another point he bellows out that a tiny minority of bankers, developersbuilders and the Irish government are responsible for the latest crash whilehe contradictorily hints that other factors may have played a role. Althoughhis book is a source of great confusion it is clear too that Kieran mayhimself be the unfortunate victim of great confusion. In his book Kieran isall over the place making it difficult to pin down what it is he is reallysaying.